Rising Drug Costs: Not Just the Pharmacy Department’s Problem

November 28, 2017
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Bonnie Lai, PhD, Vice President, Product

A few months back, I witnessed a conference presenter invite a large group of hospital pharmacy leaders to raise their hands if drug spend was one of their health system’s top three concerns. The room filled with laughter and someone shouted, “Top 10 if you’re lucky!”

This cynicism is disheartening, but not surprising. While every week brings more headlines about outrageously expensive new drugs, exorbitant price hikes for lifesaving treatments and shrinking reimbursements, these issues have often been viewed as “pharmacy’s problem.” Of course, the truth is far more nuanced and complex with wide-ranging impact on patients, clinicians and hospital leaders.

Patients: Pay More, Get Less
Drug cost increases have long outpaced clinical gains. For example, denosumab’s added efficacy in reducing skeletal-related events comes at the price of millions of dollars more per each event avoided compared to older bisphosphonates. As patients, it’s all too easy for us to lose sight of the greater good in our search for the latest and greatest treatments. However, the resulting higher payroll taxes, premiums and out-of-pocket costs hurt us all.

Clinicians: Mountains of Paperwork, Misleading Messaging
The average physician now spends over 16% of their time each week on paperwork, leading to lower job satisfaction. Spiraling drug costs means stricter policies on coverage from payers and more time spent on billing, insurance approvals and other administrative tasks. Making their jobs even harder is the flood of aggressive and confusing manufacturer-sponsored communications, which are often difficult to differentiate from solid science.

Hospital Leaders: Financial Risk and Operational Difficulty
Many systems are beginning to anticipate nearly double-digit increases in their annual pharmacy budgets. While multiple factors—both positive and negative—are contributing to this, hospital administrators need to be ready for a rapidly shifting environment. For disproportionate share hospitals, over-reliance on expensive outpatient drugs may generate more revenue now, but inevitable changes to the 340B Program will require a paradigm shift toward cost containment. Non–340B-eligible systems will face the same problem when big payers renegotiate payments.

There is a silver lining, however. From recent conversations I’ve had with pharmacy leaders, it’s clear that forward-thinking health systems are starting to address runaway drug costs as a serious, systemic issue. Here at Lumere, our new Pharmacy Solutions combine organization-specific spend and utilization data with clinical evidence to identify strategic opportunities for improving care while optimizing costs.

As an industry, we’ve still got a ways to go before drug spend makes the list of top three health system concerns, but as more and more leaders wake up to the fact that the challenges faced by pharmacy departments affect everyone, I sense brighter days ahead.

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